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If you’re in the market for a mortgage, you’ve probably come across lenders that offer Pre-Approvals and Verified Approvals. And this may have you wondering, “Is a Pre-Approval the same as a Verified Approval?”
Both provide an estimate of how big of a loan a borrower can afford and can be key when setting a budget for a house. They can also help vouch for your ability to get a mortgage once you make an offer, but one carries more weight than the other. By understanding each and how much time they involve, you’ll be ready to act when the perfect listing pops up.
Key Topics
What’s the difference between a Pre-Approval and Verified Approval?
A Pre-Approval is what some lenders refer to as a prequalification. It typically involves a quick application process, but it carries less weight in the homebuying process. To become Pre-Approved, a borrower often verbally provides the lender with an overall picture of their finances — income, debts, assets, etc. They may also need to agree to a credit check, though standards vary by lender. Once complete:
- Lenders provide a Pre-Approval letter with a ballpark estimate of how much money the borrower qualifies for.
In comparison, a Verified Approval takes the application process a step further.
- Verified Approvals provide a more accurate estimate of what a borrower may afford. Given that, they can give a seller added confidence in your bid.
When do I need a Pre-Approval vs. Verified Approval?
If you’re just beginning your homebuying journey and casually looking at homes, a Pre-Approval can be a good place to start. It’s free, has a short application process, and Pre-Approval letters are typically available within minutes with a soft credit check.
On the other hand, if you’re actively looking for a home or are ready to make a serious offer, a Verified Approval is probably the way to go. You’ll get a more precise amount for a mortgage and be able to shop for homes with added confidence. Plus, home sellers will be more likely to accept your offer knowing you’ve been reviewed by a lender. This can be especially helpful in a bidding war.
